Yesterday’s Market WrapDuring most of the day, the price action was sluggish in financial markets because traders were/are mostly anticipating the imp
Yesterday’s Market Wrap
During most of the day, the price action was sluggish in financial markets because traders were/are mostly anticipating the important US CPI inflation later today. Major currencies were trading in a limited range but commodity dollars decided to make a move and push lower against the USD.
Despite a further decline in Treasury rates during the European session, the dollar remained more stable overall. After being down again in European morning trade, 10-year rates had a fight and made a 10 basis points climb to end the day around 4.60%.
The PPI producer inflation report was released in the afternoon and showed an increase in September, as Oil prices kept increasing with efforts from Saudi Arabia. Although the USD did not benefit from it, since traders are waiting for today’s consumer inflation numbers.
Today’s Market Expectations
Today will begin with the release of the UK’s August GDP, which is predicted to grow by 0.2% as opposed to contracting by -0.5% in July. Recall that the previous report was characterized by a decline in the manufacturing of cars and medicines, with the negative effects being exacerbated by strikes and a 0.5% decline in output in the service sector. On this occasion, experts took into account a minor recovery in output in August combined with a growth in services. While acknowledging that retail sales volumes were higher in August, the statement also stated that “although the PMIs have taken a turn for the worse recently, the absence of teachers’ strikes (unlike in July) and fewer doctor strikes ought to have acted as a support.” Analysts also note that manufacturing and construction will limit growth’s potential.
The US CPI Y0Y will be released later and it is expected to show a 3.6% increase vs. 3.7% prior, while the M0M reading is seen at 0.3% vs. 0.6% prior. The Core CPI Y0Y is expected at 4.1% vs. 4.3% prior, while the M0M figures is seen at 0.3% vs. 0.3% prior. Given the overall strong economic data and the beat in the NFP report last Friday, a hot CPI report might force the Fed to proceed with a 25 bps hike at the November meeting.
The US Jobless Claims keep on beating expectations week after week as the US labour market remains solid. This week the consensus sees Initial Claims at 210K vs. 207K prior with no consensus at the moment for Continuing Claims, although the prior reading was 1,664K.
Yesterday the price action was slow again but started picking up in the US session, with the USD deciding to make a comeback, although it lost pace. It seems like traders are waiting for tomorrow’s CPI inflation report. We opened several trading signals yesterday, although only three closed, with two being winning forex signals and one hitting SL once again.
GOLD Facing the 20 Daily SMA
Gold has been making lower highs as it was slowly moving lower, but the decline became more severe and XAU lost more than $140 at the end of September. Although a support zone had developed above $1,810, the price of gold fluctuated, culminating at about $1,830. But the tensions in the Middle East that erupted over the weekend have dampened investor risk appetite, which is good news for gold. The 50 SMA (yellow) is acting as support on the H4 chart, which had a bullish gap higher yesterday night and a recent crossing over $1,850. But buyers are facing the 20 daily SMA (gray) now and the retrace down in the USSD seems to be coming to an end, so we’re preparing to open a sell Gold signal.
XAU/USD – Daily chart
- Gold Sell Signal
- Entry Price: $1,875
- Stop Loss: $1,905
- Take Profit: $1,825
AUD/USD Failing at the 50 Daily SMA
The sentiment has improved in markets which has allowed AUD/USD to recover from last week’s low, which it had briefly reached since November of last year. The recovery phase for the AUS has also been helped by the decline in the USD, which continues to remain weak, despite today’s higher PPI producer inflation report for September, as the daily chart above illustrates. The signs of a bearish reversal are increasing, with the 50 daily SMA continues to provide resistance at the top, so we decided to open a long term sell AUD/USD signal right at the 50 SMA.
Cryptocurrency Update
BITCOIN Tumbles to the 50 Daily SMA
BTC/USD – Daily chart
- BTC Buy Signal
- Entry Price: $26,248.2
- Stop Loss: $24,500
- Take Profit: $28,000
ETHEREUM Testing the Downside Again
Late last month, the price of Ethereum began to rise off its support level, indicating that there was some purchasing interest and demand for Ethereum at around $1,600. Buyers have repeatedly entered the zone above this level, but the 100 SMA (green) has served as resistance on the daily chart. Following Sunday’s advance, we had a reversal at this moving average, which wiped out all of September’s gains.
ETH/USD – Daily chart
- ETH Buy Signal
- Entry Price: $1,671.79
- Stop Loss: $1,371
- Take Profit: $1,971
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